Helping handmade, creative and craft business owners learn to handle their bookkeeping, one step at a time!
Helping handmade, creative and craft business owners learn to handle their bookkeeping, one step at a time!
Handmade business expenses MUST BE BOTH ordinary and necessary, according to the IRS in Publication 535 – Business Expenses and Publication 334 – Tax Guide for Small Business, in order to be deductible on your Schedule C Tax Return. But what the heck does ordinary and necessary even mean? I’ll explain in this post.
Tracking expenses is vital for your handmade business. By categorizing expenses into Cost of Goods Sold (materials, tools, fees, shipping) and Overhead (licenses, displays, advertising), you gain clarity on your business’s financial health. With consistent record-keeping, you can determine profitability and optimize tax deductions. Embrace the creative aspect of bookkeeping, design your system to reflect your brand, and make it fun to stay motivated. Start by organizing receipts and coding expenses as COGS or Overhead. Take control of your finances and unlock the potential for business success!